Expert points out the impacts of Selic on the lives of producers and consumers

In recent times, the Special Settlement and Custody System, known as Selic, has been a frequent topic in the media. But, we often don't even imagine how the system administered by the Central Bank of Brazil (BCB), in which federal public bonds are traded, can (and has) directly impacted the population's daily lives, mainly on loans, property financing, vehicles , equipment and projects.

When the Selic rate rises, theoretically the interest charged on financing and the value of loans become higher, and this discourages consumption, which favors a fall in inflation. When the Selic falls, there is a favorable scenario for borrowing money, since the interest charged on operations becomes cheaper, and this favors consumption.

It is worth mentioning that at this moment Brazilians are feeling an opposite movement, that is, the rise in inflation, even with the Selic moving upwards. “The BCB makes this maneuver with the aim of stopping the rise in inflation, but this is not happening in practice due to some factors, including: rise in the price of commodities, such as petroleum-derived fuels, exchange rate devaluation and, more recently, the fertilizer crisis as a result of the war between Russia and Ukraine”, adds John Alex Kalef, administrator and executive director of AgroPermuta, an agricultural fintech that offers innovative financing solutions as an alternative to banks.

According to the administrator, there are still important issues that need to be taken into account, such as the upcoming presidential elections. “It may be that typically electoral measures will further complicate the macroeconomic scenario in the near future, leaving important decisions to the next president; The moment today is truly one of uncertainty. Regarding the behavior of the interest rate, we have great expectations from the agricultural population who are waiting to see what the harvest plan will be like. Due to all these issues, it is possible that the Selic rate exceeds 12%, depending on the behavior of inflation”, he says

Going back a little to a not so distant past, between 2008/2009, the Selic rate was 14% per year, and even so, the country grew and became stronger, because the Brazilian economy became resilient, that is, it sought alternatives. According to Alex, today the issue is similar, but it is necessary to understand that when the Selic rate was lowered, people became accustomed to thinking that the government was benevolent and that the country was growing. When the pandemic came, everything changed.

Today the market for those who make investments, whatever they may be, is more aware that interest rates will not come cheaper, obviously there are some institutions that are being more aggressive in gaining portfolio. “A very practical example is Caixa, which is using a device that uses its savings resources to be able to lend much cheaper. It’s the risk they are taking”, highlights the administrator.

Immediate alternatives

In times like the current ones, when they are booming, it is necessary to look for alternatives or cheaper money on the market, especially for financing. One of these solutions, which is based on planning, is the AgroPermuta Programmed Purchase program. This tool consists of a letter of credit, in which the producer plans the financing of agricultural projects, not only silos and storage systems, but also solar plants, irrigation systems, purchase of vehicles, machinery and agricultural implements.

“Today, to acquire a good, the producer takes more expensive money, our proposal is to change that. In addition to offering the lowest interest rate on the market, much more attractive than Selic for example, we want to propose planning for the purchase, that is, building a financial reserve to acquire this asset”, says Kalef.

The Programmed Purchase is not a consortium, but a programmed financing contract. Therefore, there is no draw or bid, when paying 50% of the contract installments, the producer will be able to use the letter of credit for the full contracted amount.

There is also the Programada Financiamento Account, which was created more recently and was designed precisely to fill the gap in common financing that everyone knows about. With the new modality, the producer creates a 30% reserve and it is now possible to have access to the letter of credit. “What we did was create a product that is much more suited to the realities of sellers and also to the realities of producers. Therefore, paying for a 30% letter of credit is much more affordable”, he mentions.

AgroPermuta's proposal is to make producers understand the benefits that planning brings to them, one of which is obviously cheaper interest rates. “With our tools, farmers can better plan their cash flow. Now, instead of offering months, we are offering harvests, for example 12 months, two harvests, 18 months, three harvests and so on”, details Kalef.

Any grain producer in Brazil, regardless of their region, can have access to AgroPermuta credit, as long as they go through credit analysis. Thanks to investment in high technology, this analysis is carried out in a simple and uncomplicated way, and within 48 hours the registration can be pre-approved. After that, the ordeal and formalization (signature) are 100% digital, and Agropermuta does all the notary and registration work. The available terms are 12/24/36/48 months.

As for payment, the producer will use his grain harvest as collateral and will not need to compromise his bank credit limit. The same will be done through a Financial CPR, which can be backed by up to three future harvests, as the investment will be paid off in three annual installments. “We want to show that the producer no longer needs to be held hostage by the common financial institution, where there are traps”, concludes the executive director.